Posted in Finances, Focus, Life

Having Credit Or Not

I really don’t understand how Credit works and here’s why:

You need Credit to build Credit and if you don’t have Credit, it’s hard to start building. Sometimes, you need a deposit or an account where you put so much money in first in order to prove you will pay.

Here is my scenario:

The mortgage company said I needed my Credit to go up by 2 points before they do another Hard Pull. The other day my Credit score says one company went up one point and the other went down 12. I’m like, What the heck? Turns out, by using a store card I haven’t used in a while, my Credit score dropped. But, I have already made a payment, in hopes it will go back up quickly. Every payment I make on time..or hopefully earlier…raises my score. If I pay off both my open store accounts, I won’t have any Credit and that would totally hurt me, because I mainly use debit, which is not reported.

Author:

Blog is true. Names are fictional.

25 thoughts on “Having Credit Or Not

  1. The wife and I pay cash, even for cars and home improvements. The only thing we have financed is our mortgage. We opt to carry no credit cards because, well, we do not need them. Our income to debt ration affords us that comfort. So our credit report is as clean as a three year olds. Because we have no revolving credit, our credit scores are….ummmm….not very high. Seems the people that are rewarded are the people deep ass in debt. We have no need for a high FICO, so we just laugh at the whole racket.

    Liked by 1 person

  2. I’m sick of the TV commercials saying that a person is improving their credit score just by paying a Netflix or other bill. My bills are all paid and paid on time each month yet my score drops. These companies define you as a human being by your credit score. That’s disgusting and I refuse to be defined by a number. It’s an evil racket!

    Liked by 2 people

  3. I had this same issue. Just because you don’t have outstanding bills on the charge cards does not mean you do not have any credit. You do not have to actually have outstanding bills to have credit. You need credit to get those store charge cards – they count as credit. so if yuo keep them in good standing (or pay them off) your credit will go up as you pay it. You do not have to buy more – the lower your balances the higher your score (GETTING those cards starting building your credit). So pay off the cards when you can. Then yuo can get the credit score you need to. Also, if the scores are that drastically different, review how they calculate the scores and see why there’s 13 points difference. Every hard inquiry (like the bank will make) gives you a ding on your credit. So if yuo have a hard inquiry on one and not the other, see which one they will be using to see how far away you are, as the inquiries can stay on your report as long as 2 years, and one will reduce it’s importance over time and the other may not (I have a hard inquiry from a year and 10 months ago – one credit company doesn’t count it at all, the other one continues to count it as thuogh it happened yesterday.

    Liked by 2 people

      1. done. How’d you delete me? I didn’t even know you could delete someone from following you…. every day I learn something new about WP.

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      2. Go to your main page and hit People. There you will find your list of Followers. I try to delete businesses and others not relevant. You were probably right next to a business.

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      3. Because businesses want you to visit their sites to make money and really have no interest. If I am not interested in them, we have nothing in common. Plus, there are a few Scammers out there, I don’t want to be associated with.

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      4. Fair enough. So you take them off so that other people don’t see that they’re following you? Or see that they liked your posts because you’re no longer in their feeds…. so you get less people going to things that are scams? Right?

        Liked by 1 person

      5. I know that must seem like a silly question, but the only social media I use is WP, so i don’t understand half of what is considered “normal” because I don’t know it. I just started back with this 2.5 months ago after like 5 or so years away. So I don’t understand a lot of this stuff. So if you don’t mind explaining, I would appreciate it.

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      6. No prob. I just explained my Why. But, if you want to see who is Following your blog.. You go to ‘My Site’ then ‘People’. A list comes up of your ‘Followers.’ You can also look up your Stats and see where your Followers are coming from and what Posts they liked the best.

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      7. Yes, the stats I get. I should probably check to see who is following me, just out of curiosity. And yes, I got your why – I replied to it, I think I understood it…

        Liked by 1 person

  4. LOL I don’t want to know their algorithm. It baffles their computers, can you imagine what it would do to my brain? I just meant that if you pay off the balances in your outstanding debts, since you already were extended credit, your score will go up

    Liked by 1 person

      1. They report to the credit only after your billing cycle closes (some quarterly though). The spending is oddly reflected almost immediately on both, the paying off isn’t. But once everything is paid off, you should be fine. A good rule of thumb is 30% (I think, it may be 35%). If your balance on the total of credit limit you have exceeds (lets go with 30%) then your score is negatively impacted. So assume both store cards gave you $100 limit, your total amount of credit is $200. If you spend over 30% of that ($60) it will reflect on your score. Since nothing is $60 when you go to the store, it may be a good idea to get a credit card for emergencies, but one that you’re guaranteed to actually get so it’s not a hard hit for nothing. If that card offers you a low-ball amount of $1500, you could max out both of your store cards and still spend $250 on the new card and be 30%. Also, be careful to pay your payments by the due date so that you keep a good standing, if you miss any, your score drops. If I have to buy anything that is too much for me to afford at any given time, like a new washing machine or something, I use my credit card. I also monitor it. My minimum payment is say, $200. If I make that $200 a month, then I’m still in good standing. But I figure out how many pay days I have until that $200 is due, and every pay day, I pay toward it. Some months it’s rough and I can only make the minimum, but other months, I go a bit higher (which is REALLY good because you pay it off faster). Your credit is lowered because of the expenditure, yes, but as you pay it off, it slowly creeps back to where it is supposed to be. When the bill is paid off, your credit is back where it needs to be. But if you’re only planning on using your store cards and you get that credit card, you will be using less than the 30% and the card companies will not smash you to pieces. You may go down a point or two. But if you take all of your available credit and add it together, that’s the basic math on how it works. If your available credit is $200, you hit up both stores, and spend $90 at each, happy you didn’t go over, your credit will reflect that you are using 90% of your available credit which makes the companies go “woah!” and your score reflects that. They don’t care that you only have $200 available, they care that you’re using 90% of the available credit you have. And that’s why you take such a huge hit. Does any of what I’m saying make any sense? I am not an expert at this, I just learned how it worked because I waited until I was 35 to get my first store card (kept getting turned down since I was 33 for “insufficient credit history” which made me want to scream!)

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